LA city attorney suing to recover $95M in public pension funds

DOWNTOWN LOS ANGELES

The lawsuit alleges that 43,000 city employees lost pension assets because of bad investments. Northern Trust Corporation and Pension Consulting Alliance have been named in the suit, which demands that the money be paid back, plus fines.

City Attorney Carmen Trutanich said the money was lost by the Los Angeles City Employees Retirement System, or LACERS.

"Even when it was apparent that the market turned south, the company during this time repeatedly told LACERS they were making money," Trutanich said.

Northern Trust said the LACERS did not lose money on securities lending, and securities lending investments were prudently made and carefully monitored.

But the city attorney said that 2 1/2 years of work by his staff and supporting documents will prove otherwise.

The lawsuit alleges that Northern Trust made high-risk investments in consumer debt companies and mortgage backed securities, and it used city employee pension money with which it was supposed to be making low-risk investments.

"Isn't that what happens? You invest money in securities, you win, you lose? Not in pensions folks. They have a fiduciary responsibility to make them safe," Trutanich said.

Councilman Dennis Zine said that includes the pension funds which cover police, fire and Department of Water and Power employees.

Bob Schoonover, a spokesman for the largest city employees union, said the lawsuit is good news and there is really only an upside if the money is recovered.

Both companies have denied any wrongdoing and claim no pension lost money in any alleged wrongdoing. Northern Trust said it will defend itself against what it calls a meritless lawsuit.

Copyright © 2025 KABC Television, LLC. All rights reserved.